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Dear sir,
It seems that when calculating cash paid for finance lease under CFF, the format is like below:
finance lease b/d
+additions to finance lease capital balance
– cash paid for finance lease
= finance lease c/dHowever, I’m wondering if it should make sense to add the interest expenses on the finance lease to b/d to calculate the cash paid:
finance lease b/d
+ interest expenses on the finance lease
+additions to finance lease capital balance
– cash paid for finance lease
= finance lease c/d
Can you help thanks!Regards
LmNo, deal with the interest separately within the “interest charge” add back and the “Interest paid” within operating activities
The financing activities element of finance leases in statements of cash flow is purely the capital elements.
So:
Brought forward (both long term and current) +
Additions –
Cash paid =
Carried forward (both long term and current)
OK?
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